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Need for Cash Flow Statement

The average t...

Question

The average time between giving the product to the customers and receiving payment is called .

A

turnover ratio

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B

cash conversion

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C

days receivable

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D

days payable

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Solution

The correct option is C days receivable
Days receivable is the average time between giving the product to the customers and receiving payment.

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Q. Calculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information:

	1st April, 2018 ₹	31st March, 2019 ₹
Sundry Creditors	1,50,000	4,50,000
Bills Payable	50,000	1,50,000

Total Purchases ₹ 21,00,000; Purchases Return ₹ 1,00,000; Cash Purchases ₹ 4,00,000.

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Average Inventory ₹3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables ₹4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales.

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